New law lures investors

A new investment law focuses on simplifying procedures and offering guarantees to investors

The Parliament is expected to pass the law within a month

Investors are awaiting a much-anticipated new investment law aimed at encouraging investment in Egypt. The draft law has been finalised by the government and is now being discussed by parliament.

“We have gone a long way in discussing the law in parliament, and we hope it will be approved within a month,” said Mohamed Khodeir, head of the General Authority for Investment and Free Zones (GAFI), during a conference in Cairo this week.

He said the law was part of government efforts to reform the investment climate, saying that he and his team had met with many people from the investment community to find the best way to revive the country’s investment climate.

The majority had agreed that Egypt needed a new investment law to suit the current juncture and address bureaucratic problems, Khodeir said.

The new law has three main parts. The first was the simplification of procedures and an acceleration in implementing them, Khodeir said, adding that the new law addressed bureaucratic problems by referring clearly to the need to facilitate transactions.

The second part is the guarantees offered to investors. Khodeir said the law offered guarantees that complied with international standards and that would reassure investors.

The third part is a temporary incentives programme that will be offered to specific sectors and in specific areas with the aim of encouraging investment in these areas.

One businessman who spoke on condition of anonymity told Al-AhramWeekly that investors needed solid assurances, especially when investing in developing countries. He added that it was very important for investors to understand how they could exit the market.

“In the same way that they understand how to enter the market, there should also be understanding of how to exit it,” he said.

Khodeir said the government had worked on a bankruptcy law to address problems of exiting the market.

In January, the government approved the country’s first bankruptcy law to spur investment. It aims to minimise the need for companies or individuals to resort to the courts and should simplify post-bankruptcy procedures. It also abolishes prison sentences in cases of bankruptcy.

The businessman referred to the importance of clarity in settling disputes and regarding which entity is entitled to resolve any disputes, an issue that the new law regulates in 10 articles.

During discussion in parliament, the law has faced criticisms from Abla Abdel-Latif, head of the Presidential Advisory Council for Economic Development, who said it was not enough to attract investors. She said there was a need for a bundle of complementary legislation, including an industrial permits act, to be issued in tandem to overcome contradictions in the legislation.

The law also faced criticisms from the head of the Egyptian Competition Authority, Mona Al-Garf, who said the draft law was lengthy, making it difficult for investors to understand their rights and obligations. She added that the draft law was different from the one approved by the State Council.

Khodeir said the State Council had had some observations on the law that had all been considered. “The law is man-made, so criticism is normal, and we welcome any proposed alternatives,” Khodeir said.

The new law contains more than 70 articles and aims at attracting investors as Egypt strives to lure them back after political instability over recent years has scared them off.

It facilitated investment procedures in line with government plans for administrative reform, said Sahar Nasr, minister of investment and international cooperation. She said the law had a specific timeframe that was intended to eradicate bureaucracy.

The parliamentary economic committee approved the investment law in late February, and committee members were expected to finalise their discussions in two weeks so that the bill could be put to a vote by the end of March.

The government first approved a new investment law in March 2015 to boost investor confidence, eliminate bureaucracy, ease procedures to obtain licences for projects, and attract foreign investment. It amended the law last year.

Foreign direct investment in Egypt has been slowly increasing, and in the 2015/16 financial year reached around $6.84 billion, up from $6.38 billion the previous year.